U.S. history key to solving crisis, Nobel laureates say

The winners of this year’s Nobel prize in economics said yesterday that the eurozone crisis is mainly a political issue, not an economic one.

New York University’s Thomas Sargent, who with Princeton University colleague Christopher Sims captured the annual prize for economics, said the founding of the United States shows what the issues and solutions are.

“There are no new issues in economic theory with Europe and the euro... the difficult thing is the politics,” Sargent told a news conference in Princeton. “In the 1780s, the United States is a basket case,” he added, with 13 sovereign governments, each of which could raise taxes and print money.

In contrast, the nation had a very weak center, not having yet established a central bank or gained taxing power....